Neogen Chemicals Limited

Neogen Chemicals reported an 8% year-on-year revenue growth, reaching INR 209 crore in Q2 FY26. Gross profit saw a 16% improvement, driven by a 350 basis points margin expansion. However, EBITDA stood at INR 30 crore and PAT at INR 3 crore, impacted by elevated operating costs, increased insurance premiums, and higher finance costs. The company's core business maintained market position despite geopolitical uncertainties, with organic revenue growing 12% to INR 184 crore and Neogen Ionics contributing INR 5.42 crore.

The company is rapidly advancing its greenfield facility for electrolyte production, with mechanical completion expected by end of 2025. Trial production is slated for H1 FY27 (April-September 2026), and electrolyte salt commercial production in H2 FY27. A key Indian gigascale customer has already approved the Dahej plant for electrolyte supply, and provisional approval for lithium electrolyte salt from an international customer is secured, with final approvals anticipated in Q4 FY26 or Q1 FY27. This positions Neogen as a non-FEOC compliant supplier, crucial for US 45X credits by 2027.

Due to delays in Indian gigafactory ramp-ups and final salt approvals, Neogen has revised its FY26 battery chemicals revenue guidance downwards to INR 30-40 crore from an earlier estimate of INR 300 crore. For FY27, the company expects Neogen Ionics to achieve INR 400-500 crore in revenue, with a long-term target of INR 2,400-2,900 crore by FY29 at full utilization. Management noted a shift in China's battery chemical pricing, with costs firming up due to reduced overcapacity and increased demand, which is favorable for Neogen.

The base business remains on track to achieve INR 850 crore in FY26. For FY27, the company targets a standalone revenue of INR 950-1,000 crore, with an expected margin of 18% +/- 1-1.5%. Beyond FY27, Neogen aims for double-digit growth in its base business without significant additional capex, leveraging optimization of existing plants. Strong demand in organolithium and Custom Synthesis Manufacturing (CSM) segments is contributing to this positive outlook.

Neogen successfully executed a private placement of INR 200 crore NCDs to fund ongoing growth projects and rebuild the Dahej organic plant. Consolidated total debt stood at INR 1,078 crore, with net debt at INR 900 crore, and liquid investments of INR 167 crore. The company expects peak gross debt to reach INR 1,800 crore around FY28, aligning with full utilization. Total capex of INR 1,500 crore across Dahej and Pakhajan sites is anticipated by FY27. Insurance payouts for the Dahej fire are progressing, with INR 80 crore received for capex claims and majority of stock claims expected in Q3 FY26, while loss of profit claims are anticipated in Q2/Q3 FY27.

Neogen currently has a combined LiPF6 capacity of approximately 7 KTA (3 KTA Greenfield + 4 KTA Dahej). The company foresees a strong need for additional salt capacity by FY28-FY29. Management indicated the ability to easily add 2 KTA through existing block expansion within 9-12 months and another 5 KTA using existing infrastructure within 15-18 months. There is also space for further expansion beyond 10 KTA, demonstrating flexibility to meet growing demand.

Significant steps were taken to enhance corporate governance, including the separation of the roles of Chairman and Managing Director, effective October 1, 2025. Mr. Anurag Surana was designated as Non-Executive Chairman of Neogen Chemicals Ltd., and Mr. TCN Sai Krishnan was appointed as Executive Director. These appointments, including a non-promoter family member as chairperson, reinforce the company's commitment to robust independent oversight.